March 25, 2023

Economix Blog: Older, but Not Yet Retired



Dollars to doughnuts.

The labor force participation rate has fallen drastically in the last few years, partly because a huge chunk of the American population — the baby boomers — is rolling into retirement age. But the aging of Americans born from 1946 to 1964 has not actually had as big a drag on labor-force participation rates as demographers might have guessed a few decades ago.

That’s because it has become much more common for people over 65 to continue working.

According to a new Census Bureau report, in 2010, 16.1 percent of the population 65 years and older was in the labor force, meaning either working or actively looking for work. Two decades earlier, that share was 12.1 percent.

The increased labor-force participation rate for the most senior Americans is partly tied to more women joining the work force over time, though men have shown large increases too:

Source: U.S. Census Bureau. Source: U.S. Census Bureau.

Source: U.S. Census Bureau. Source: U.S. Census Bureau.

Within the 65-and-over population, those from 65 to 69 had the biggest bump in labor-force participation. Across both genders in this narrower age range, the rate increased to 30.8 percent in 2010 from 21.8 percent in 1990, a 9 percentage point increase. (Interestingly, the share of people from 16 to 64 who were in the labor force moved in the opposite direction during that time, falling to 74 percent in 2010 from 75.6 percent in 1990.)

People may be working longer because they are in better health in their late 60s and expect to live longer than their counterparts a couple of decades earlier. But they may also have greater financial responsibilities today than in the past.

In 2011, of workers who said they would be delaying their retirement, 13 percent explained that they had “inadequate finances or can’t afford to retire” and 6 percent gave the reason of “needing to make up for losses in the stock market,” according to the Employee Benefit Research Institute. The share of people who said they were having to retire later than expected has also been much higher in the last few years than it was when the economy was good.

Source: Employee Benefit Research Institute. Source: Employee Benefit Research Institute.

To put all these numbers in context, it’s worth remembering that labor-force participation rates for people over 65 used to be much higher in the late 1940s and 1950s:

Source: Bureau of Labor Statistics. Source: Bureau of Labor Statistics.

Additionally, people over 65 in the United States are far more likely to be in the labor force than people in most other developed countries, according to the Organization for Economic Cooperation and Development:

Source: Organization for Economic Cooperation and Development. Source: Organization for Economic Cooperation and Development.

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Make Your Pitch: Pitching an Employee-Owned Assisted Living Facility

Make Your Pitch

Film your business plan and send it to us.

For our last pitch, I reviewed a bridal brokerage company focused on finding brides and grooms to take over abandoned weddings. This week, I review a pitch for an employee-owned assisted-living facility.

You can view the original video pitch and my review of the pitch below.

Here’s the pitch:

Here’s my review:

We all know that our population is aging and that services that cater to the elderly will be in great demand. AmericanWay is an assisted-living facility focused on meeting this need through an employee-owned organization.

This was an interesting pitch to me, one that differentiated itself from other pitches by telling a story. It opened with some statistics about the aging of the American population, but it never really addressed the scope of the opportunity. Instead, the founder (who didn’t introduce herself) used her own words, her employees’ words and visuals of the business to illustrate the opportunity and create an emotional connection with the viewer.

Another reason I liked this pitch is that the entrepreneur has taken out some of the risk for an investor or lender. The business appears to be a going concern — it has a team, and it even owns property. This engenders confidence regarding the entrepreneur’s ability to execute on a business plan (although the scope of that would obviously need to be confirmed through examining the financial statements).

Moreover, the entrepreneur offered a very clear ask. After introducing the business and the approach, she clearly outlined that she is looking to borrow money — not to sell equity. She even focused on the type of interest rate she is seeking, making it easy for potential investors and lenders to understand whether the structure and opportunity is a type that they would be interested in.

The concept of an employee-owned organization is one that normally would need more exploration. Giving employees incentives is a good thing, but it could create issues for a potential investor contemplating taking an ownership stake in the business. That said, since the entrepreneur is seeking debt capital (as opposed to giving up equity ownership), it is probably more of a positive than a negative. However, most investors or lenders will want to delve further into the employee-ownership structure.

Now, I would have liked to have more information, including the current size and profitability of the business and the potential for growth. I also was a tad confused about the concept of the money staying in the business instead of being paid to shareholders. But all of that aside, it’s an interesting market segment, a clear investment structure and the entrepreneur inspired confidence. There are details left to learn, but the story hooked me and I want to know more.

What are your thoughts about AmericanWay and the pitch? Share below!

Carol Roth is a business strategist who has helped clients raise more than $1 billion in capital. You can follow her on Twitter.

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